Webinar: Fundraising for Startups Entering the UK
On 26 March 2020, Advantage Austria gathered experts from the London startup ecosystem to share their advice on fundraising in the UK as a part of the initiative go-international. The initiative is a collaboration between the Federal Ministry for Digital and Economic Affairs of Austria and the Austrian Economic Chambers.
Read the key takeaways below.
Creating a Successful Pitch for London Investors
Opening remarks were made by Vera Maier, Deputy Trade Commissioner & Commercial Attache at Advantage Austria, London. Afterwards, Renate Schnutt, Head of Startup and Innovation Programmes, Advantage Austria, very convincingly spoke about the attractiveness of the London startup scene. Anthony David King, Global Startup Accelerator Innovator and Founder of ADK, continued by giving his advice on what should be featured in an investor pitch.
When pitching to investors, King stressed the importance of considering what type of investor you are speaking to. The startup ecosystem in London is very diverse in terms of different investors, including Angel investors, VCs, corporates and accelerators, crowdfunding etc., and they typically have different motives for investing. Your route to market, for example – some types of investors prefer strategic partnerships as a market entry strategy, others social media, for example.
What is the most important thing to include in a pitch?
One of the most critical parts of the investors pitch is also the number one reason for failure in the startup ecosystem in the UK – the importance of understanding your market. What it looks like now, the competition and growth potential. You need to be able to show how you differentiate yourself in the competitive landscape.
Another important aspect of your pitch is showing your core team and how each individual is the best person for the job. VC’s often expect a highly experienced team of advisors, while angel investors will want to take on that role themselves.
It is also important to be specific about what you are asking for – are you raising a specific round, or do you have any commitments already? Quantify as much as possible – not only regarding investments, but also when describing your market, growth potential, and so on.
Top 5 Tips for Startups Who Enter the UK to Seek Funding
Goodwille CEO Alexander Goodwille, continued the webinar by sharing his own top 5 tips for companies who enter the UK wanting to seek fundraising.
1. Do what’s right for you
Understand your investors and make sure they align with your business. Strategic partnerships as a way to enter the UK market has generally a large successrate for startups.
2. Get ready to flip it
Due to the UK’s beneficial business landscape and accessibility of Enterprise Investor Schemes (EIS), your investors might require you to move your headquarters to the UK.
3. Get ready for the exit
At the time being, there are uncertainties between the FTA and WTO regarding what Brexit will entail for companies looking to enter the UK. Setting up a subsidiary today may prevent future problems.
4. Do it the right way
It is important to consider your end goal. If you are planning to make an exit, you must make sure you have all your due diligence in order. Entering a new market entails new laws and directives, and getting it wrong can be costly. Most common mistake is VAT, so make sure you work with a local partner from the start.
5. Why are you waiting?
Setup- and operational costs are low in the UK and the process of setting up an entity is quick. The only thing that usually takes some time is setting up a bank account, so move forward today if you’re considering an expansion within the near future. Meanwhile, Goodwille can assist you with a client account to pay staff, tax and suppliers.
How does COVID-19 affect entering and fundraising in the UK?
Before wrapping up the webinar, the audience had the chance to ask their own questions during a Q&A session. Naturally, the audience raised concerns about the COVID-19 situation – is now really a good time to expand to the UK and approach investors? Well, according to the speakers, the situation is still promising.
King mentions that the startups in his network are still closing plenty of funding rounds. Back in 2016 when there were fear and hesitation for what was going to happen due to Brexit, he experienced quite the opposite. Many investors saw opportunity to become more active in the scene, and the investment activity had doubled the following year. Possibly we can see the same pattern during COVID-19. Renate Schnutt adds: “My personal impression is that VCs are more approachable because they have more time”.
There were also concerns about the current travel ban to the UK. According to Alexander Goodwille, setting up a branch or Limited company in the UK remotely isn’t an issue at all; “We have a company secretary that can administer and sign for the business. That enables us to do a lot of the work remotely”.
What are the main investment trends in the UK?
For investment trends, particularly in terms of angel investment funding, King can see that specific sectors are trending at the moment, including AI and FinTech. Why? FinTech solutions entail opportunities in scaling and market adoption. With the help of technology, AI addresses new things that weren’t possible before. Again, understanding the underlying motives of an angel investor becomes important. Since angel investors are often times senior professionals or founders who want to be a part of something new and exciting as their largest incentives of investing, this becomes a good match.
When giving their last piece of advice to the audience, King emphasized on the importance of a good network – utilize as many contacts as you can, and don’t be afraid to ask for introductions.
From Alexander Goodwille, the message was clear: “Focus on what you’re good at”. He continues: “Focus on selling your product into the market and finding your investments. Those are the crucial things for your business. If it’s not core, find a local partner to help you”.